How to Make a Real Estate Analysis?
A real estate analysis is a document that helps people understand the worth of a property. It's also known as comparative market analysis. This kind of analysis contains data on the value of each property in a certain area. The website Passive Real Estate Investing said that 5 million houses were sold in 2016. Prices of rental property and commercial spaces go up as time passes by. Buying a property is not easy, but it's worth a try through a real estate analysis. If you need ideas in writing one, we have some tips for you to read below.
1. Study the Competition
This is the first part of your analysis. Now that you have set your eyes on a particular property, learn about the competition with other properties in the area. Determine the number of properties situated in the area and the number of people who want to buy it. Competition is tighter when more people want to live in that certain area.
2. Look at the Environment
The environment where the property is in can affect its value in the long run. Some of the considerations that you need to check are the water supply, soil, climate, public utilities, and transportation. Make a checklist for this part of your document. If any of these four does not match your preferences, then don't buy the property.
3. Examine Trends
The trends that you need to examine when doing your analysis are the booming of businesses and the age bracket of the people in the area. More businesses mean a more solid cash flow. You also need to consider the income of the people and their educational background. The results of this examination can influence your decision to buy a real estate property.
4. Think Bigger
Whether it's for lease or not, you have to consider the declining or booming rate of real estate in the area of your choice. Seeing a decline in the real estate trend may lead you to a trap.
How many pages is a real estate analysis?
There's no standard length in terms of pages for a real estate analysis. As long as you have all the needed information, then you're good to go.
How big is the real estate industry?
The website Small Biz Genius said that the real estate industry is worth $27.2 trillion in March 2019. There are no signs of slowing down for this industry as more people want to buy properties.
What are the types of real estate?
According to The Balance, the four types of real estate include:
1. Residential - These are the types of property that people use for shelter, such as houses, apartments etc.
2. Commercial - These are the properties used for businesses, such as stores and malls.
3. Industrial - These properties are for storing, distributing, and producing goods. Industrial real estate can be used for research purposes too.
4. Land - Ranches and farms belong to this category. Underdeveloped land and those vacant ones are considered real estate as well.
Who writes the real estate analysis?
The realtor usually writes the real estate analysis using Word or a spreadsheet in Excel.
Why is it important to have a real estate analysis?
Having a real estate analysis can help you in making the right decision in buying a property. With this document, you'll know if a property is worth buying or not. It's like your SWOT analysis.